CCI scrutiny finds Zomato & Swiggy breached competition laws: Report
Zomato was found to have imposed pricing and discount restrictions on restaurant partners, while Swiggy is said to have threatened to lower the rankings of partners who didn't maintain price parity.
Food delivery and quick commerce giants Swiggy and Zomato 's business practices are reportedly in violation of competition laws, according to findings by Competition Commission of India (CCI).
A report by Reuters says that, as per non-public documents prepared by CCI, Zomato entered into "exclusivity contracts" with partners in return for lower commissions, while Swiggy promised business growth to certain players if they listed exclusively on its platform.
Zomato was found to have imposed pricing and discount restrictions on restaurant partners, with penalties for non-compliance, while Swiggy threatened to lower the rankings of partners who didn't maintain price parity, says the Reuters report, citing CCI's non-public documents.
Swiggy and Zomato did not respond to queries sent by YourStory.
CCI's investigation in the food delivery players were initiated in 2022 after complaints from National Restaurant Association of India (NRAI) about the impact of alleged anti-competitive practices by the platforms on food outlets.
The NRAI complaint alleges that certain practices by Swiggy, including exclusivity agreements with restaurant partners, price parity requirements on third-party platforms, and its involvement in the downstream market, are harming competition, Swiggy noted in its red herring prospectus (RHP).
"We cannot assure you that an unfavourable decision in the aforesaid proceeding will not be passed or that such decision will not have an adverse impact on our business and operation," Swiggy said, regarding the NRAI litigation, in its RHP.
The final phase of the CCI investigation involves a decision by the CCI leadership, which is still reviewing the investigation findings. The leadership will decide on any penalty or order changes to the business practices of Swiggy and Zomato.
Deepinder Goyal-led Zomato and Sriharsha Majety-led Swiggy have the option of contesting the investigation findings with CCI.
Shares of Zomato closed 3.22% lower at Rs 247 apiece on Friday, while Swiggy's IPO was subscribed 3.59 times on its final day (November 8).
Edited by Swetha Kannan